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    This document contains a handout with questions about microeconomics principles and concepts like supply and demand, consumer surplus, producer surplus, total surplus, price ceilings, and deadweight loss. It provides examples of calculating these values based on supply and demand graphs at different price points. For the first question at a price of $7, it finds the consumer surplus is 20, producer surplus is 20, and total surplus is 40. The second question looks at a price of $9 and calculates the relevant values and deadweight loss. The third question analyzes the impacts of setting price ceilings at different levels.

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    This document contains a handout with questions about microeconomics principles and concepts like supply and demand, consumer surplus, producer surplus, total surplus, price ceilings, and deadweight loss. It provides examples of calculating these values based on supply and demand graphs at different price points. For the first question at a price of $7, it finds the consumer surplus is 20, producer surplus is 20, and total surplus is 40. The second question looks at a price of $9 and calculates the relevant values and deadweight loss. The third question analyzes the impacts of setting price ceilings at different levels.

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    8 views3 pages

    Efficiency

    Uploaded by

    Skylar Hsu
    This document contains a handout with questions about microeconomics principles and concepts like supply and demand, consumer surplus, producer surplus, total surplus, price ceilings, and deadweight loss. It provides examples of calculating these values based on supply and demand graphs at different price points. For the first question at a price of $7, it finds the consumer surplus is 20, producer surplus is 20, and total surplus is 40. The second question looks at a price of $9 and calculates the relevant values and deadweight loss. The third question analyzes the impacts of setting price ceilings at different levels.

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    of 3

    Principle of Microeconomics

    Handout #5

    Question 1

    Assume equilibrium price of $7, with demand D and supply S, in the graph shown. What are
    consumer surplus, producer’s surplus and the total surplus?
     Consumer Surplus = [(11-7)*10]/2 = 20
     Producer Surplus = [(7-3)*10]/2 = 20
     Total Surplus = 20 + 20 = 40

    Question 2

    Assume the current price is $9 in the market. Calculate the consumer surplus, producer’s
    surplus, total surplus, and the deadweight loss.
     Consumer Surplus = [(11-9)*5]/2 = 5
     Producer Surplus = [(5-3)*5]/2 + 5*4 = 25
     Total Surplus = 20 + 20 = 30
     Deadweight loss = 10
    Question 3

    The figure shows a market in equilibrium.

    a. Draw a price ceiling at $12. What is the amount of shortage at this price? Draw and
    calculate the deadweight loss. 

     No impact on the market


     Consumer Surplus = 36
     Producer Surplus = 18
     No shortage

    b. Draw a price ceiling at $4. What is the amount of shortage at this price? Draw and
    calculate the deadweight loss.
     Consumer Surplus = 28
     Producer surplus = 2
     Deadweight loss = 24
     Shortage of 6

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